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Exclusive Contracts and Market Power: Evidence from Ocean Shipping

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  • Marín Uribe, Pedro Luis

Abstract

There is a substantial theoretical literature on the potential effects of loyalty contracts, but a relative paucity of empirical work. This Paper employs the event study methodology to examine the effect of exclusionary contracts on firm performance in the ocean shipping industry. Shipping conferences - legal cartels exempt from antitrust laws - offered discounts to customers that patronized exclusively cartel member firms. The usage of these contracts was the subject of an extended legal and political struggle. We test for the impact of the most important events in this conflict on the stock returns of firms in the shipping industry. We find that some of these events resulted in significant changes in the firms? stock returns. Our evidence suggests that exclusive contracts may have contributed to market power in the shipping industry.

Suggested Citation

  • Marín Uribe, Pedro Luis, 2001. "Exclusive Contracts and Market Power: Evidence from Ocean Shipping," CEPR Discussion Papers 2828, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2828
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    References listed on IDEAS

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    More about this item

    Keywords

    Event study; Exclusive contracts; Shipping conferences;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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